US Retil Sales Preview: Forecasts from six major banks, consumers cautious about opening wallets to retailers

The US Census Bureau will release the December Retail Sales report on Wednesday, January 18 at 13:30 GMT and as we get closer to the release time, here are the forecasts of economists and researchers of six major banks regarding the upcoming data. 

Economists expect the US to report only a meager 0.1% increase in sales after a drop of 0.6% in November. Expectations for Retail Sales Control Group are for a second consecutive drop of 0.2%.

Citibank

“We are expecting a 0.8% MoM decline in total retail sales in December with the main drag coming yet again from auto dealers and gasoline stations as both unit of auto sales and average retail gasoline prices declined . Higher frequency credit card data point to continued strength in the only services category in retail sales. The drop in real retail sales will likely not be as large since some of the weakness comes from lower goods prices, particularly for gasoline. This, in combination with very strong retail sales in October and strong restaurant sales, keep Q4 consumption close to previous expectations.”

RBC Economics

“The slowdown in US unit auto sales, combined with a drop in gas station sales in December, was likely to result in a 1% drop in US retail sales.”

NBF

“Car dealers likely contributed negatively to the headline number, as auto sales contracted during the month. Gasoline station receipts could have decreased as well judging from a drop in pump prices. All told, headline sales could have sunk 0.7% in the month. Spending on items other than vehicles may have decreased a bit less, sliding 0.3%.”

TDS

“We look for retail sales to have retreated sharply in December (-1.2%), building on a more modest decline from the prior month. Spending was dented by significant contractions in auto and gasoline station sales. Importantly, control group sales likely also fell for a second consecutive time (-0.3%), while those for bars/restaurants probably advanced slightly for a fifth month straight.”

CIBC

“A sharp drop in unit auto sales, combined with a decline in gasoline prices, will weigh on total retail sales, which likely fell by 0.9% in December. That will also likely include a 0.4% decrease in the control group of sales (ex. autos, gasoline, restaurants, and building materials), as sales volumes in that group remain well above their pre-pandemic trend line, and spending likely continued to be skewed towards services in December, away from discretionary goods. We are more pessimistic than the consensus, which could cause bond yields and the USD to ease off.”

Wells Fargo

“While we expect high financing costs to continue to depress goods spending, we look for services spending to keep growing in the medium term. The tight job market continues to support income growth, and there is increasing evidence that inflation is slowing. However, holiday sales were likely pulled forward this year by retailers’ early discounts, which would make the case for a December decline. We look for retail sales to drop by 0.9% in December, but accounting for a 1.1% decline in consumer goods prices last month, real retail sales are likely to be positive.”